Anyone who has insurance doesn't care about the price. They only care about the deductible. When people shop around, they look for the insurance companies that provide the lowest deductibles and stick with them. After that, there's no pressure on the providers to lower prices. The insurance companies in the US don't negotiate lower prices, they just pass on the cost to policy holders in their deductibles. The providers can increase the price without fearing that patients will go to a different clinic or buy a different generic version of their drug. Medical care in the US is one of the only industries where raising the price can get your more customers, since it makes the government push for universal health insurance to keep deductibles low.
There are a few solutions, two of which were mentioned in the article. The insurance companies can negotiate prices with providers, or the government can set the price. A third option is to let the patients themselves set the price by having them shop around. The patients would put pressures on the providers by going where they can get the cheapest MRI or the cheapest Lipitor. Then insurance would be reserved for emergency procedures, instead of being used as a medical credit card.
I don't know about you, but next time I need an emergency room or surgical procedure, I'm not going to be shopping for the cheapest one. The article addressed this - how do you 'shop around' when you're under anesthesia, and would you really hire the cheapest doctor to diagnose your daughters life threatening ailment? It just doesn't play out in reality.
Most medical procedures are not emergent. It's hard to shop around for emergency care, but shopping around for everything else is pretty straightforward.
We have strong experimental evidence that when people are not insulated from price, they shop around and consume less medicine with no measurable effect on their health.
I agree that much of the general public is insulated from price, however a few personal observations: (Note: I worked for 8 years for a state insurance company and my wife has been a nurse practitioner for 12 years)
People don't "shop" for healthcare the same way they shop for televisions or other consumer products. In fact the overwhelming majority tend not to all. Either someone like me at their insurance company picks a primary care physician for them, or they pick one from a list based on simple factors like someplace convenient, seems like it's a good part of town, etc. Unless the doctor is so unbelievably terrible, it's extremely unlikely they will switch. My wife, who is frustrated by many aspects of our healthcare system, attributes much of this to the complete and utter lack of medical literacy possessed by the general population. The average person simply has no idea how modern medicine works on any substantial level, so they have little to no basis for making an informed decision about their care or provider. When you are sick, even with something routine and non life-threatening, you don't think "Hmm I could go see the doctor today because I feel awful, but I think I'll price shop for a day or two beforehand." Even people with strong financial incentive, i.e., people with limited means, don't do this. If a child or loved one is involved you're even less likely to start thinking about dollars over medicine.
I do agree that most patients have no accurate understanding of the real cost of their care, and that more education in that department certainly can't hurt, but no matter how you slice it, that cost is simply much higher than it is in other developed societies, and that is a serious problem that needs to be addressed.
Edit: Something I wanted add: I know in a community like HN, many will be of the sentiment that if you fail to educate yourself about a product or service, you borderline deserve the consequences. I agree with this in most respects. However, taken to it's logical conclusion, that would require me to become an expert on everything under the sun. I have no idea how the plumbing in my home works, or how to do anything but routine maintenance on my car. It's not that I lack the interest to learn about these things, it's simply that there aren't enough hours in the day to plausibly accomplish this. When faced with the need of a professional expert, I have to use a little common sense mixed in with any superficial knowledge I do have, and trust that there is a system in place that prevents me from being totally screwed price wise.
> so they have little to no basis for making an informed decision about their care or provider
The problem with not allowing individual choice in regards to health decisions is illustrated succinctly by the War on Drugs.
Additionally, even if we rigorously proved that local decision actors in a market operate upon highly imperfect knowledge when making decisions, it would not constitute a proof that a global decision actor with access to enlightened knowledge would be able to make decisions for them more efficiently or justly by employing a non-market based algorithm.
> If a child or loved one is involved you're even less likely to start thinking about dollars over medicine
Why is medicine different from food, water, and shelter? Aren't those even more important survival needs we are forced to make tradeoffs regarding every day?
My Mom (no insurance) shops around as follows: "Hi, I'm told I need X done, but I need to know the price. I don't have insurance, and I want to make sure I have enough money to pay for it."
She tends to get accurate estimates, probably because hospitals don't like to hear "I thought it only cost $X, I don't have $X + $Y, so, umm..."
Granted, what she gets isn't likely to be a "a complete cost estimate [...], [...] reflective of any negotiated discounts, [...] inclusive of all associated costs, and did not identify consumers’ out-of-pocket costs", which is what the GAO wanted. But it's certainly good enough for shopping around.
Yes, most agree that security against unexpected and unpredictable costs, such as emergency room visits and catastrophic illness, is the proper role of insurance.
However, for drugs, chronic treatment, and preventative procedures, costs would much lower if consumers were allowed to shop around and haggle prices without going through insurance. This is why you see certain operations like Lasik, which are elective and not covered by anyone's insurance, becoming highly roboticized and deflating in cost rather than inflating.
I've heard this before. Do you think that Germans or the French end users care about the price? No - they're insured far better than any American without a (D) or (R) after their name. They just _go to the doctor when they're sick_. Period.
So France and Germany have some non-price rationing mechanism. Whatever mechanism they have, it causes them to half less than half as many MRI's (per capita) than the US.
MRIs in Germany (or at least my part of it) tend to be relatively rare and booked almost completely full, because with the prices the way they are, they're not profitable unless they're utilized as much as physically possible. There's therefore usually a waiting period of a few days for a non-emergency MRI, which tends to make them a less attractive option for doctors and patients than they might be if they were instantly available. On top of that, they're still relatively pricy compared to other diagnostic procedures, and in Germany, a doctor or hospital who prescribes too many expensive procedures may get personally stuck with the cost, instead of being able to pass them on to the patient or insurer.
Just how many of those MRIs in the US are done without insurance or medicare - ie, are subjected to price rationing mechanisms?
Moreover, in a system like the US health care the "average" isn't very meaningful, because if you and I have a sore knee, and you get 2 MRIs per year, and I get none, well...
"The insurance companies in the US don't negotiate lower prices, they just pass on the cost to policy holders in their deductibles."
I'm sorry, this is wrong. The insurance companies actually DO negotiate lower prices. I recently had surgery and through my billing statements watched as first the hospital attempted to charge an obscene amount (that would have bankrupted me several times over had I not had insurance), then having my insurance company go through every line in the bill to let them know the max amt they will pay for each service provided. This was recently Reported on, I'll try and find the article.
You make a good point, in that the end users in the US just care about the deductible.
Part of this is that its hard (if not impossible) to find out what something will cost. The doctors don't (or rarely) know the cost, and it just isn't in the standard vocabulary of patients to inquire the cost and/or shop around.
There are a few solutions, two of which were mentioned in the article. The insurance companies can negotiate prices with providers, or the government can set the price. A third option is to let the patients themselves set the price by having them shop around. The patients would put pressures on the providers by going where they can get the cheapest MRI or the cheapest Lipitor. Then insurance would be reserved for emergency procedures, instead of being used as a medical credit card.